Employee turnover is costly. Some estimates put the total cost of losing an employee at 1.5-2 times of that position’s annual salary. This is primarily because people are “appreciating assets”—the longer a worker stays with an organization, the more productive they become, explains Jack Altman, CEO of Lattice.
If you lose a key employee who knows your systems, your procedures, and your customers by heart, it could take their replacement a year or two to reach the same level of productivity. Additional costs involved include:
- The advertising, interviewing, screening, and hiring of a replacement.
- The training and management time required to onboard a new hire.
- A spillover effect that causes other employees to disengage and become less motivated and productive in the face of high turnover.
- Customer service declines while errors increase.
So, why do your good people keep leaving you?
Sometimes it’s about money, but not as often as employers think. Although too little money does contribute to high turnover, paying people more won’t compensate for a bad work environment. “Your well-paid but unhappy employees will simply leave you and make their money somewhere else,” notes Altman.
Spend some time reflecting on these five common managerial mistakes that might be contributing to your high turnover rate.
1) Are You Hiring the Right People for the Job?
A single bad hire costs more than $50,000, according to 27 percent of employers in the United States that participated in a 2013 CareerBuilder survey. Talent management consultant Rebekah Cardenas, Ph.D., advises organizations to keep the focus on what candidates can bring to a company rather than degrees earned or schools attended: “Hire for attitude first and then train for technical skills.” Invest in people who will produce the greatest gains for your organization through competencies such as “innovation, adaptability, communication skills, and working well with others.”
2) Do you have a clear and purposeful company mission?
Most people want to feel that the services or products their company provides make a positive difference in the lives of customers. This is especially true of Millennials in the workplace who “long to be part of something bigger than themselves,” according to professor and author Karl Moore in a piece for Forbes.
Articulate a concise company mission that unites your staff and drives performance. Moore adds: “Giving your young employees a purpose will enable them to envision a future with your company . . . If an organization is unable to map out a road plan, a purpose of employment, it will unfortunately notice a high 0-2 year turnover. Millennials need direction and meaning, an interesting mixture of altruism and self-interest.”
3) Do you recognize contributions and reward good work?
Most top performers are self-motivated and typically require fewer pats on the back than their underperforming peers. But this doesn’t mean they don’t appreciate recognition. Smart managers know which rewards carry the greatest value for their best workers, and they make liberal use of them to keep morale, motivation, and loyalty high. Whether it’s a raise and promotion, paid time off, a holiday bonus, or a round of golf with the CEO—be in tune to what your top people want most, and be generous about giving it to them.
4) Have you created a culture of caring?
Feeling appreciated, valued, and respected is a core human need. Building a work environment that lets employees know that their managers and their coworkers have their best interests in mind empowers them to work harder, take more risks, and celebrate team successes. As Jack Altman writes in HuffPost: “Employees will feel happier on a day to day basis knowing they are surrounded by people who don’t just want something out of them, but want something for them.”
5) Do you provide employees with growth opportunities?
Humans seek growth and change, and if you’re not giving your employees access to development opportunities aligned with their long-term personal goals, they’ll get bored and move on. Help your people increase the skills and knowledge required to advance their careers by partnering with educational institutions that offer custom-designed learning programs. Post University, for example, helps employees through the Post University Corporate Partnerships Program.